RADIO REPORT: THE NEW MULTIPLES OF RADIO SELLING - With fragmentation comes a lack of cohesion. But has the radio industry come out on top? By Eleanor Trickett

It is now history, but since Capital Group announced its bid to take over Virgin Radio in May 1997, the radio sales market has changed beyond measure. To satisfy the Department of Trade and Industry’s monopoly restrictions, Capital set about disbanding its sales house, Media Sales and Marketing, which not only handled sales for Capital Group stations, but also for Emap and GWR.

It is now history, but since Capital Group announced its bid to

take over Virgin Radio in May 1997, the radio sales market has changed

beyond measure. To satisfy the Department of Trade and Industry’s

monopoly restrictions, Capital set about disbanding its sales house,

Media Sales and Marketing, which not only handled sales for Capital

Group stations, but also for Emap and GWR.



The fact that the merger was event-ually scuppered by a maverick bid

from Chris Evans had little effect on what has become a fragmented

market.



MSM was disbanded, which had a knock-on effect. Emap and GWR pulled

their sales forces - Emap On Air and Opus respectively - in-house.

Meanwhile, Katz Radio Sales, currently the only independent radio sales

house, picked up smaller sets of stations that had nowhere to go.

Capital set up Capital Advertising for the group’s stations. Add to this

the existing in-house operations for Chrysalis, CLT, Scottish Radio and

several standalone London-based stations and the picture is

complete.



But is this fragmentation positive? For a long time, MSM bore the brunt

of criticism, blamed for everything that was wrong with the market

because of its size and dominance. In its last full per-iod of trading,

January to June 1997, it was selling 41.4 per cent of all advertising on

national radio. This offered a one-stop solution for the year’s radio

deals for the laissez-faire planner.



Industry reaction has been unanimous: the move to in-house sales was

healthy for the market. Justin Sampson, operations director at the Radio

Advertising Bureau, says the industry has, at times, suffered from lack

of cohesion.



’At the beginning of 1997, a lot of media planners and buyers were

saying that radio was not as friendly as it had been. Its reputation had

been damaged by problems of accountability, inflation and a huge

administrative burden piling up,’ he says. ’There were complaints that

MSM was slow to get back to people and, when it did, it was often wrong.

The media planners were telling us that they were getting better service

from sales people employed by the stations that they represented.’



Paul Davies, the former managing director of MSM and now Capital’s group

commercial director overseeing Capital Advertising, is experiencing the

differences perhaps more than most. ’I think a lot of companies wanted

to be masters of their own destiny - us included,’ he says. ’The problem

with running a big sales house is being driven at the pace of the

slowest.



MSM had to try and bring a huge swathe of people along at the same pace,

and when you’re trying to market all your stations in a consistent way,

it’s hard for any individual station to stand out.’



Of course, the move in-house not only benefits agencies and advertisers,

but increases revenue and profile for the stations themselves. Nigel

Reeve, the former sales director of Classic FM and now managing director

of London News Radio, comments: ’When we were grouped with MSM’s music

stations, all we could have achieved was a bog-standard share of

revenue, and we didn’t even do that. Now we are selling for ourselves,

we are no longer a commodity but a brand, and our revenue has gone up by

80 per cent year on year.’



Reeve puts his finger on what has been widely acknowledged as the main

advantage of in-house sales - better product knowledge. Tim McCabe, the

head of radio at BBJ Media Services, whose client, Bass, is a major

spender on radio, says: ’Product knowledge is especially important for

clients who are considering radio for the first time, as generally it

makes the medium more accessible.’



But what are the downsides? The age-old problem of accountability could

worsen temporarily as each group’s new system is cranked up, but by the

time the Joint Industry Commercial Radio IT Futures group is fully

operational, technological problems should be ironed out. Under JICRIT’s

set of init-iatives, buying and selling data will be electronically

processed, meaning transparency and ease of use. Furthermore, the new

climate means that agency buyers will be talking directly to the people

who have responsibility for the inventory they represent, making the

process more efficient.



Some clients have voiced worries that prices will rise as start-up costs

are passed on to the buyers. But one client, whose company is among the

largest radio spenders, disagrees. ’Prices will only go up if

advertisers and agencies let them. It’s more likely that they’ll be more

stable. Aggressive selling demands aggressive buying; the agencies won’t

accept high prices.’



It seems a little unfair to charge MSM with all the industry’s problems

- and yet more unfair to allow MSM horror stories to tarnish the concept

of independent sales houses altogether. For many smaller radio groups

and independent stations, setting up an in-house operation would be a

huge expense. And as franchises are being scooped up by first-time radio

operators - such as Xfm - setting up for broadcast is simplified if

someone else is worrying about airtime sales.



David Foreman, the managing director of Katz Radio Sales - which has 15

per cent of the market - believes there is no great difference between

an independent sales house and an in-house selling point in terms of

brand knowledge. ’I am aware that Katz is in a marketplace in which it

is the odd one out, but we know as much about our stations as Emap or

GWR know about theirs. Radio stations need specialists - and agencies

demand that sort of knowledge.’



And what do the clients think? ’We felt frustrated in dealing with MSM,’

one says. ’Too much of the market was dominated by too few players. But

not everyone agrees. Some agencies and advertisers prefer simplicity of

dealing and don’t see the benefit of competition. A one-stop shop like

MSM was perfect for them.



I think we are starting to see the benefit of more competition and a

more detailed sell. It follows that selling for a smaller number of

stations will lead to a more concentrated job.’



It is hard to judge the effect of this fragmentation upon the

market.



Emap On Air, Opus and Capital Advertising have been trading for a matter

of months, and no data is available. But if the advertisers and the

agencies are as happy with the arrangements as they claim to be, then

there is no reason why radio cannot continue to grow and achieve its

target of 8 per cent share of display advertising by the year 2010.



Become a member of Campaign from just £45 a quarter

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.co.uk ,plus get exclusive discounts to Campaign events

Become a member

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an Alert Now

Partner content

Share

1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).